Plastics Industry Bounces Back

Opportunities are growing as U.S. plastics manufacturers stay ahead of global competition with new processes and innovations.

Clare Goldsberry , Area Development Contributor, (Jun/Jul 06)

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Recycling and New ProductsIowa, known to some as the Corn State, is also a prime area for the new business of biomaterials, which many predict will also be big business in the near future. A partnership between Metabolix Inc. and agricultural firm Archer Daniels Midland Co. announced the siting of a plant in Clinton, Iowa, to produce bioresin, a natural corn-based resin that the companies claim will be the first commercially viable, 100 percent organic plastic.

Plastic recycling, in spite of some challenges for that business in the past, still holds out hope for viability as "green" businesses begin to catch on again. A new recycling company, called Polymer Reprocessing Technology Center LLC, has been sited in Ottawa, Ohio, with operations expected to begin by year's end. The company will recycle PET, a packaging plastic. The parent company, Moving Expressions, is an injection molder and blow molder in Ottawa, and was looking for a way to develop a source of recycled PET, both for its own use and to offer for sale on the secondary resin market. The company has applied for a grant through the Putnam County Commissioners for $250,000 from the Ohio Department of Natural Resources Division of Recycling and Litter Prevention, which the company will have to match if it gets the money.

With California ranking number one in plastics, that state continues to play a major role in spite of the grass-roots consumer campaigns against plastic materials. To be sure, challenges still exist for the industry in that state, but its positive impact on the state's economy can't be ignored. While the exodus by manufacturers from California seems to have abated, plastics companies are looking outside California for additional sites.

For example, PWP Industries, an extruder and thermoformer of amorphous PET packaging for bakery goods and fresh-cut produce in Vernon, Calif., announced in March that it will invest $9 million-$12 million in a plant in Abilene, Texas. It will be the company's third manufacturing site. Ira Maroofian, PWP's president, cited work force quality, customer proximity, and support from the area's development corporation as reasons for locating the facility in Abilene. Operations are expected to begin in August.

Other areas in the Western region are attractive to plastics processors as well. Southern Idaho is home to several notable plastics manufacturers including Solo Cup Co., which purchased rival Sweetheart Cup in 2004; Hilex Poly, the largest manufacturer of plastic grocery bags in the United States; and Spears Manufacturing.

Hilex Poly, headquartered in Hartsville, S.C., celebrated the grand opening of their Jerome, Idaho, facility in September 2005, and will produce plastic t-shirt bags. Spears Manufacturing purchased a building in Jerome that had formerly been a Tupperware plant. Spears manufactures PVC pipe fittings, valves, and tubing, and today employs approximately 200.

"The opportunities they found in this region have enabled each of these manufacturers to build, grow, and expand their businesses, thanks to the area's low cost of operations and significant business incentives," according to the Southern Idaho Economic Development Corporation.

Electric power in many Western states is still economical, and Southern Idaho's power rates are among the lowest in the nation at approximately 3.0 cents per kW. Rates like this are attractive to plastics processing companies, for which electric power is a huge expense.

The U.S.-Mexico border area still can't be overlooked, and many companies that serve large U.S.-based OEMs in the automotive and appliance industries continue to site plants in that region. Venture Plastics Inc., an injection molding company headquartered in Newton Falls, Ohio, announced that it is expanding operations into the Southwest with a new molding facility located in El Paso, Texas.

"This strategic expansion has been driven by our commitment to meet the needs of our customers, some of whom have established a strong presence in the southwest and require services that are made more efficient by close proximity," says Steve Trapp, vice president of Venture Plastics. "Our positive, long-term relationships with those customers, combined with the fact that Venture Plastics has been growing at an annual rate of 12 to 15 percent, makes this an ideal time to extend the breadth and depth of our injection molding capabilities." The 50,000-square-foot plant will open with eight to 10 injection molding presses, and approximately 20-30 employees will be hired initially to service automotive parts makers and the appliance, consumer, and power supply systems markets.

The bottom line is that there continues to be opportunities for plastics processors to expand and grow their businesses in response to customers' demands, whether that means siting a plant on the U.S.-Mexico border or in any region of the United States that offers benefits to the customer and the supplier. The factors that matter to those in the plastics industry are the same today as they have been for many years: a skilled work force, cost-effective electric power, access to good transportation, a customer base located in the region, and, of course, economic assistance from the local development groups to provide good incentives to locate in a specific area. While competition from international companies and questions about energy supplies continue to challenge the industry, plastics are a good bet and good business all around.